TMS Ep367: India's infra ambitions, Railways, markets, pledging of shares

In yet another blow to the Adani Group, MSCI has changed its weightings for some of the conglomerate’s stocks. The global index provider has cut its determined free float for four group companies, including flagship firm Adani Enterprises. Adani’s troubles, brought on by allegations of fraud, have also led to doubts about India’s growth story, which is being driven by investments in infrastructure. So, will the storm set off by Hindenburg Research hit the country’s ambitious infra plans? 

A 33% hike in capital expenditure outlay for FY24 attests to the government’s commitment towards building better roads, highways, ports and other critical infrastructure. And from the proposed Rs 10 lakh crore capex budget, railways got the lion’s share. But despite the good budgetary allocations in the past, the national transporter’s operating ratio is still hovering close to 100. So how best can the railways allocate its budgetary outlay? 

Meanwhile, for corporate India, the pace of earnings growth continued to slow down in the December quarter as high interest rates increased the costs. Besides, persistent weakness in the rural economy, coupled with plateauing urban discretionary spends, ate into the profitability. Find out the key risks that India Inc may see in upcoming quarters.

The rout in Adani group stocks -- which began January 25th after the release of a Wall Street short seller’s report -- was halted for a brief two-day period last week. It coincided with the conglomerate’s move to release pledged shares worth $1.11 billion in its three companies about nine months ahead of the maturity. It instilled some confidence in the investors, before another news dented it. But what is pledging of stocks? Listen to this podcast for more.